Biden urged to fix civil service loan forgiveness by automatically wiping out civil servants’ debt

President Biden is under increasing pressure to tackle the troubled Public Service Loan Forgiveness Program (PSLF), a vital student loan forgiveness program designed to take the strain off teachers, nurses, members of the career military service and other officials.

A broad coalition of more than 200 organizations representing consumers, veterans, borrowers and people of faith sent a letter to Biden this week urging him to take immediate and radical action to address the shortcomings of the PSLF program – in in particular, by automatically eliminating the federal government. Student loan debt for all borrowers who have completed 10 or more years of public service employment, regardless of their compliance with the requirements of the public service loan forgiveness program.

The PSLF program is popular and in theory would allow millions of borrowers to get their federal student loans canceled after working full-time for public employers or 501 (c) (3) nonprofits. for 10 years or more. But the program has complicated eligibility criteria, which limit relief to borrowers who only have certain types of federal student loans, which must then be repaid under specific repayment plans tied to the borrower’s income. . These rather opaque requirements have historically not been well communicated to borrowers.

And the PSLF program has been plagued by problems for years. A report released earlier this year by the Federal Bureau of Consumer Financial Protection (CFPB) accused student loan service companies of widespread wrongdoing, concluding that “student loan services gave incorrect information to borrowers “on the demands of public service loan forgiveness, resulting in” default “that could cost consumers thousands of dollars.

The CFPB’s findings were reflected in own statistics released by the Department of Education showing approval rates for the PSLF program. According to the ministry, between November 9, 2020 and April 30, 2021, out of 168,197 PSLF requests, 3,458 were approved and 164,739 were rejected. That’s a refusal rate of almost 98%. A parallel program designed to address some of the shortcomings of the PSLF, called the Extended Public Service Loan Temporary Forgiveness (TEPSLF), has an equally high refusal rate.

“Congress, in a bipartisan fashion, pledged over a decade ago that public service workers who choose to give back to their communities and to our country would not be locked in a life of debt … This promise has been broken up, ”the coalition wrote in its letter to President Biden. The administration must act to correct “existing loan cancellation programs so that the ministry keeps promises required by law.”

Biden campaigned on the promise to fix the PSLF program. And his administration has agreed that improvements need to be made. “We need to work hard to make sure the civil service loan forgiveness program works as it is supposed to,” Secretary Cardona said during a public roundtable on the PSLF program earlier this year. “We have a lot of work to do. ”

The Biden administration will begin work on a major overhaul of the regulations governing key federal student loan relief programs, including the PSLF, as part of a negotiated rule-making process. Hearings are expected to begin next month. But rewriting the federal rules is an extremely slow process, requiring multiple rounds of hearings and public comment. Any lasting change to the program would likely take years.

Advocates for student loan borrowers are urging Biden not to wait. “This action should be immediate and not need to wait for the education ministry to draft new rules,” the coalition wrote in its letter. The groups called on President Biden to use his executive power under existing federal laws – which allow a president to unilaterally change federal financial aid and student loan programs in a national emergency – to automatically write off debt federal student loans for all borrowers who have worked. in the public service for 10 years or more.

Further reading

Biden has promised a new, cheaper income-based plan for student loans. Will it happen?

Key Biden official suggests mass student loan forgiveness won’t happen

Student loan borrowers: expect these 4 things by January

Biden administration begins overhaul of student loan forgiveness and income-tested repayment programs

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